Regarding the bottom, I thought so too as I had low ball bids on some calls but missed by about a 1/2 to point. Actually pretty close since I put in the order before work and the calls fell 13 points to within that margin of error. Now after trying to catch up on SI, I am not so sure we are near the bottom.
Donand I both have buy signals but the bounce should have come Friday afternoon to Monday. I have another set of signals pointing to Wednesday. However I am worried that the bounce may be feable at best and more of a bounce to go short even more so far this morning. My reasons are....
1.) OJ and American Spirit are still bullish and buying all the way down. I use these guys as contrarian indicators and have been doing so for months and months and.... it works great. Until they give up, we could keep falling.
2.) A guy at work when he heard about the drop continueing, stated he was buying more. This is a guy who has 100K in the market, doesn't know what a stock chart, PE, PEG, a 10Q or 10K is. He is Mr. J6P and he isn't scared yet nor are most of the others I have talked to yesterday afternoon and this morning. I am getting ready to get dragged around the neighborhood to Garage Sales by the Mrs. and I plan on asking people what they feel about the market. Should give me a little insight. <ggg>
3.) The 3 peaks and a dome that Jerry Favors posted months ago, I fully embraced as I tracked the high flyers and how they traded in relation to it. It is still appearing to be valid so far and from the stocks that were early in tracking it tick for tick, they are still falling more heavily than I ever thought. If the NASDAQ does the same only delayed in relation to the stocks that are doing this, then we aren't anywhere near the bottom.
4.) Laugh if you want, I know I used to, but the full moon rule of trading has also been accurate the last few months. Sell the full, buy the new. We have a full moon the 18th, thus we are not in alignment to buy yet.
5.) The only strength I have seen thus far is in SUNW and a few other narrow stocks. No capitulation yet. ALso supports are failing one after another. There is an old rule on wall street I ALWAYS follow and that is whena support breaks, no big deal. When a second support breaks, SELL IMMEDIATELY! The NASDAQ is breaking them in rapid succession.
6.) Weekly and Monthly charts are showing that even though we aredown substantially in relation to the highs, we are no where near the long term trendlines of the past. We could still fall a lot lower. Also looking at the declines in many stocks that fell ahead of the rest of the crowd, they have fallen much further than teh rest of the market so far and are still declining. I used this with succes in 97 and 98 and it worked. Watch the ones that dropped early and pass that percentage change on to the rest of the market and you have your bottom target. We are not even close yet.
7.) Last, I may sound like a broken record here but stocks are not at value prices yet. Much of the "earnings" the last year or more have been in "other income". This is recognized income from playing the stock market. Some of these in very large "street favorite" stocks are in teh magnitude of 20-35% of total income. If the market stops going up, these "earnings" vanish and thier inflated PE ratios with them. Also, a dead market will make employees want cash instead of options. More impact on earnings. Some of the stocks that most people want are only having earnings income of 10-30 cents a share yet are trading at huge multiples with stock prices in the 70-150 range and have HUGE floats of stock after splitting so many times. The amount of revenue and earnings increase required to grow in a per share growth rate to equate to their PE ratios is simply impossible unless they will control the entire world's wealth in the future.
Now on the bullish side, MDD had 300 posts which is usually the sign of a short term bottom and a lot of new posters ranting and raving are showing up. When the bear threads start getting active, we are getting close. So far the Kahuna threads are still relatively quiet.
I haven't finished running my charts so I won't make any predictions yet. I need to look at some of the smaller issues, check out some more obscure support lines and see what may be hiding out there. I know I am already to dip which means that I don't have much fear either and I am a good contrarian indicator myself so when I give up, that is when you should buy. <ggg>
Early guess now is possibly as low as 2800 onteh NASDAQ but there should be a bounce in between somewhere first. I thought 3450-3500 would be it but it fell like butter. Looking back further, a week where we fell like this usually had a second week that was also down so while I am tempted to dip here, I can only pray for the restraint not to do so.
Good Luck,
Lee |
